New Store Seeks To Close Bargain Gap

San Francisco-based Gap Inc. wasn't expected to expand its newest retailing vision to the Chicago market until next year.

But Thursday, without fanfare, the company officially will open an Old Navy Clothing Co. store in space formerly occupied by a Gap Warehouse in the Prairie View shopping center in Morton Grove.

It doesn't look a whole lot like a Gap, but it has a Gap feel to it and is run like a Gap. The prices, however, are very un-Gap.

Gap jeans cost $34 a pair; a pair of Old Navy jeans are priced about a third less.

Gap says the Old Navy jeans are made of different fabrics, and they have different labels. But most people will be hard-pressed to tell the difference.

"This is Gap's answer to T.J. Maxx," said one analyst.

Since March, when Gap unveiled its latest vision, the company has opened 14 new Old Navy stores and converted two existing Gap Warehouse locations. The Morton Grove store is the first in the Midwest. Other Old Navy stores until now have been opened only in California and Texas.

"It's a neat concept," said Philip Abbenhaus, an analyst with Stifel Nicolaus & Co., an investment banker based in St. Louis. "I think they're trying to reach middle America with it."

Like Gap stores, Old Navy is heavy on customer assistance.

Several other Old Navy stores are slated for the Chicago market, but Gap officials aren't saying where. One likely target will be the Gap Warehouse in Norridge across the street from the Harlem-Irving Plaza shopping center. That store already is carrying some of the Old Navy merchandise.

But the company can't be too aggressive with the new format because it doesn't want to steal sales from its mainline stores.

"They are looking around for the most prudent way to grow," said Abbenhaus, noting that the company operates 848 Gap stores and 179 Banana Republic stores. "They're looking for something for three to four years down the road that will drive profits. This may be it."

Gap tested the Old Navy idea last year by converting about 45 poorly performing Gap stores into Gap Warehouse outlets. The results were good enough that the company decided to expand the idea under the Old Navy name.

The stores are heavy on Gap basics-jeans, T-shirts, dresses. But they're not heavy on interior decor-they have cement floors and metal shelving. It's a design with which the company is intimately familiar. When it began 25 years ago, its Gap stores had cement floors and metal shelving.

But Gap is hoping the self-service atmosphere coupled with significantly cheaper prices will drive volume sales.

"This is their foray into middle-market America in strip centers and outlet centers," Abbenhaus said. "In today's retail world, if the customer is sensitive to price, why not do something to reach that customer."